The Basics of COBRA

Are you an employer with more than 20 employees? By Federal regulation, you are required to offer terminating employees and those with other qualifying events continued coverage for particular periods of time.

This month’s blog will concentrate on COBRA basics. If you are an employer with less than 20 employees, then State Continuation is what is required for continuation of benefits. I will review that next month.

COBRA is the Consolidated Budget Reconciliation Act of 1985. This act allowed for employees to continue their ‘core benefits’, typically health and dental coverage, for a period of time after separation of employment.

The employee has 18 months of allowed continued coverage.

Any covered dependents would have the same 18 months of coverage, with the employee required on the coverage with the dependents.

In addition to termination of employment, there are other events that require an employer to offer COBRA coverage:

Death of an employee: (dependents would be allowed 36 months of continued coverage)

Divorce: Spouse and eligible dependents would be allowed to continue coverage for up to 36 months. Even if the employee is still actively employed.

Employers are REQUIRED to provide eligible recipients with coverage similar to active employees, EVEN when coverage changes (i.e. at renewal)

There are two ways to administer COBRA benefits

The employer can administer the benefits themselves. This would entail sending out the specific timely notices, collection of payment and reimbursement of payment to the carrier.

A Third Party Administrator can be hired where the employer would contact the TPA when an employee is terminated or there is another qualifying event. The TPA then would commence in collection of premiums, remitting them directly to the carrier of the coverage or to the employer.

There are many questions an employer and/or employee has regarding COBRA along with form letters and regulations that must be met. As a broker handling employee benefits, Health Insurance Advisor has the experience assisting employers with the facets of COBRA. We are NOT a Third Party Administrator, but have extensive knowledge, keeping current with COBRA rules and regulations.

Contact Health Insurance Advisor at 515.225.9994 if you have questions regarding COBRA. We can assist the employer and employees to make the right decision regarding their health insurance needs.

A little more about us:The Business Warrior group has some of the industry’s top experts in all the areas your business needs to be successful. Amongst the contributors is Janis VanAhn, owner of Health Insurance Advisor, LLC. For 19 years Janis has worked in and around the health insurance industry initially providing service to agents and employers related to employee benefits, individual healthcare and Medicare, while more recently becoming appointed as an individual agent with various quality carriers to provide this service to individuals through her own business.

Four years ago Janis was ‘blessed’ with being let go from her job at an insurance ageny. Staying within insurance was her path…but in what capacity. 2010 was the year Janis began her career as an independent insurance agent specializing in health insurance. Finding quality, cost-effective healthcare for individuals and families under age 65 as well as working with those who are Medicare eligible truly was her passion. She has made this a true specialty and positioned herself as someone to work with whether it is a financial professional or property & casualty agent with a client that needs assistance, to a group of seniors turning 65 and they keep receiving Medicare information and are confused about what to do.

Janis enjoys the one on one contact with clients as well as looking forward to speaking to groups about healthcare. Her excitement for this industry is what drives her to stay in tune with Healthcare Reform and what is currently happening and what will happen with coverage from now to past 2014.

‘Educating individual and Medicare consumers to make informed choices’ is her mission because if people are educated and understand, they will make informed choices that they are comfortable with.